Jun 23, 2019

Don't bother worrying about Libra

Illustration: Sarah Grillo/Axios

"Reinvent money. Transform the global economy." That's the promise at the top of the homepage of Libra, an almost parodically ambitious pecuniary exercise brought to you by the empire-builders at Facebook.

The big picture: Facebook is no stranger to hubris. Back in 2013, CEO Mark Zuckerberg decided he was going to reinvent the smartphone. “Today, our phones are designed around apps, not people,” he said. “We want to flip that around.”

Be smart: The balance of probabilities is that Facebook Money is going to go the way of the Facebook Phone — or, for that matter, Facebook Credits, the company's previous attempt to get into payments. Facebook co-founder Chris Hughes has laid out many good reasons to worry about Libra succeeding, but the fact is that Facebook's cryptocurrency ambitions are unlikely to get all that far.

Libra's primary stated goal is to concentrate on serving the 1.7 billion of the world's adults who are entirely outside the financial system. The idea is that they should be able to send and receive money as easily as they do text messages.

  • The problem: These people — whom the industry likes to call "the unbanked" — might well be able to open up a Libra wallet on their phones, but they will still need "on-ramps" and "off-ramps." How do you convert cash into Libra, or Libra into cash? The global remittance industry has struggled with these last-mile problems for decades; Facebook hasn't even started thinking about how to address them. Even domestically, Libra doesn't seem to solve any of the problems facing the unbanked.

Libra is, literally, run by committee. It's called the Libra Association, and Facebook has just one vote. When problems arise, Facebook will point out that it does not control the currency. This will not mollify regulators.

  • Libra is global; the Libra Association is based in Switzerland. The system as a whole is designed to operate as seamlessly in Tehran as it does in Tulsa or Tegucigalpa. But that's a problem for regulators, who have sanctioned countries like Iran and who have gone to great lengths to ensure that money can't easily flow there. In the U.S., the chair of the House Financial Services Committee has already requested a moratorium on further Libra development; international regulators are similarly underwhelmed.
  • Worth noting: The long list of partners in the Libra Association includes everybody from Visa to Vodafone — but doesn't include a single bank.

The bottom line: Libra can't be successful without regulatory approval, and that approval isn't going to arrive anytime soon.

Go deeper: FT Alphaville has a whole series, "Breaking the Zuck Buck," devoted to all the problems with Libra.

Go deeper

White House announces new coronavirus travel restrictions on Brazil

Brazilian President Jair Bolsonaro with Trump, March 19, 2019. Photo: Jim Lo Scalzo-Pool via Getty Images

The White House announced Sunday that President Trump would suspend entry of non-U.S. citizens who have been in Brazil in the past 14 days in an effort to stop the imported spread of the coronavirus.

Why it matters: Brazil has reported nearly 350,000 confirmed cases of the coronavirus — the second-most in the world behind the U.S. — and has emerged as a Southern Hemisphere hotspot as other heavily affected countries in Asia and Europe have managed to get their outbreaks under control.

Trumpworld's plan to brand Biden

Illustration: Aïda Amer/Axios. Photos: Chip Somodevilla/Getty Images, Mandel Ngan/AFP

Trump's advisers relish the contrast between his public appearances and Joe Biden's lack thereof. The former vice president, following the guidance of public experts, has eschewed public events and stayed home for months now. Trump, meanwhile, is out and about — masks be damned.

What we're hearing: Watch for plenty more mask-free outings from Trump, hyping the reopening of the economy and avoiding discussions of social distancing and death counts.

Scoop: Inside the secret talks to overhaul the GOP platform

Jared Kushner. Photo: Mandel Ngan/AFP via Getty Images

For the past six months, top Trump campaign officials, reporting to Jared Kushner, have been working on a radical overhaul of the Republican Party platform.

Driving the news: The Trump campaign's Bill Stepien has been leading the process, working with campaign colleagues and the Republican National Committee. As with all significant campaign matters, they've been reporting back to Kushner.